Myths About Retirement Planning

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Some myths in retirement planning are stated below, we believe these myths are so prevalent in our society that retirement takes a back seat, the salaried person, entrepreneurs and self-employed all share these myths in varied degrees.

Too Early:The blunder which young salaried person makes is to think that they need not plan for retirement. Some of the responses from young salaried professionals are “I am only 28 years old and just started earning, I have long way to go, let me think about my career growth first then we will think about retirement.” Another 30 year old responded “I am too young to think about retirement now” and so and so forth. Young professionals are more focused on making more money than saving more money. They want to grow their career and achieve their dreams. All this is very good and progressive but penny saved is penny earned is a concept still to catch up with them. They believe that thinking about retirement is too early and should not come in their career growth. The more we communicate with young professionals the more we are convinced that nobody under 30 ever thinks about retirement, if anything they have odd insurance policy or investment made to avail benefits of tax exemption.

Post-retirement expenses would be less:This is a myth and very prevalent one because not enough thought has gone into the retirement planning. Young professionals think that expenses are high now because we have lot of aspirations and dreams to full fill. Going on holidays, enjoying life, etc. are going to keep the expenses high now more than during the retired period. As we grow old expenses will be low so no need to worry about it now, myth. If anything is guaranteed in life it’s that the cost of living is going to increase. Not only that. the new heads of costs may show up like medical costs, children education, marriage, parents responsibility etc. which one does not anticipate at younger age.

Insurance will be enough:After retirement the insurance policy will pay for medical costs, medical emergencies and accumulated amount that will come on policy maturity will be enough to take care of all the expenses, myth. At young age of 25 or 30 people make mistakes of buying insurance policies as investments tools, insurance policies are investment vehicles, it’s one of the worst myth in our country. Insurance is for protection not investments, fundamentally the investment and insurance serve two different purposes. Myth, insurance policies deliver good returns on investments.

Family Business:For entrepreneurs, a lot of reliance is laid on family business, the business will take care of our retirement, myth. It is not that business will not grow and may become a main asset in life time, the concern is the risks associated with it. Business, it has its own set of risks you cannot subject your retired life to same set of business risks, so if business goes down at the age of 59, and no personal portfolio was built, then retired life can be miserable.

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